Tang Shaoyang could simply wipe them out, but he decided not to. He took such a great length to explain to Bai Jinwei that his family was safe along with the people in the city. It was not simply because he was afraid of them, but because they potentially had a role in his next step of the Thousand Vows Pavilion.
The same by sparing the Alliance Leader. The reason was simple. He didn't want the Sacred Realm to be out of order because of the collapse of the Murim Alliance. For that to happen, he must not kill the Alliance Leader. Zhong Tian Yun must live to lead the weakened Murim Alliance.
That way, the establishment of the Thousand Vows Pavilion would go smoothly. The Sacred Realm was the best place to rebuild the Thousand Vows Pavilion. It would be easier to find disciples since the people had faith in cultivation.
